Knights Stadium in Sunshine North is hard to reach, both literally and figuratively. With an imposing industrial gas plant to one side and an enormous quarry on the other, the stadium sits almost on the edge of reality. The street sign points left to either the evangelical Christian Enjoy Church, or Melbourne Croatia Soccer Club, an open-air place of worship for Victoria's Croatian diaspora.

Over the October long weekend, former National Soccer League (NSL) club Melbourne Knights (neé Croatia) hosted the annual Croatian Soccer Tournament. The event – which the Melbourne Knights president, Andelko Cimera, calls the "Croatian festival of football" – took on an extra dimension this year.

Melbourne Knights are celebrating their 60th anniversary in 2013. "When the other clubs learnt that we applied to host the tournament, and the reasons why, they pulled out as a mark of respect", says Knights committeeman Pave Jusup.

In Australia, as in the Balkans, politics is never far from Croatian soccer. The tournament itself was born out of conflict with the Victorian State Federation in 1972, after Melbourne Croatia were expelled because of crowd trouble with Hakoah St Kilda.

In response, the Croatian Soccer Federation of Australia and New Zealand reignited a dormant idea for a Croatian Cup, which had been successful in North America but failed to materialise in Australia. Six clubs participated in the first tournament in 1974, and almost 40 years on, the pool has expanded to some 30 teams, with names like Fremantle Croatia, Glenorchy Knights, Vukovar and Auckland Croatia. Perhaps the best moniker is the war-like HNK Bunker. Club logos invariably incorporate the red and white checks of the Croatian sahovnica, while almost all the clubs are decked out in the national colours of red, white and blue.

But the more things change, the more they stay the same. The Melbourne Knights, along with most of Victoria's top football clubs, remain locked in a legal stoush with Football Federation Victoria (FFV) over the implementation of a new state competition. The day before the tournament launch barristers representing the FFV and the clubs shut themselves in a tiny room in Melbourne Magistrates Court, battling out a decision that may have an enormous impact on the future direction of clubs like the Melbourne Knights.

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The opening night of the Croatian Tournament tingled with history. The Melbourne Croatia Masters side took to the field with no fewer than nine former Socceroos. "It was like watching NSL 1994, '95, but in slow motion", laughs Pave Jusup.

The old boys are here in numbers. On Friday morning, I stood with Rick Tiatto, watching his son Danny play for the Masters team. While Danny bosses the midfield, his old man regaled me with stories about his son. "He made mincemeat of David Beckham!" he says happily, before recounting his own days as a hard-man sweeper. To our left was Knights legend and former Socceroo Billy Vojtek leaning over the perimeter fencing in a trademark leather jacket. The former Bayer Leverkusen goalkeeper Frank Juric chuckled with his team-mates after making a reflex diving save, while former Socceroos midfielder Josip Skoko was busy making coffee in the marquee tent.

"I played all my junior football throughout the Croatian community", says Skoko, while pouring me a flat white. "I started at Mt Gambier Croatia in South Australia, to North Geelong Croatia … I think this tournament is a chance for an end of year trip for people, and it brings the community together."

On the field, however, there is little love lost between the players. In an early game on Friday between St Albans Dinamo and Western Knights (North Perth Croatia), the tackles flew in thick and fast, with one winger having to be carried off after a brutal challenge in the first half. In the Mark Viduka Stand, a wild looking man paced around, intermittently barking instructions and "Cro-a-zia!" at the players in a gravelly voice. Of course, both being Croatian teams, its hard to tell whose side he was on, until he started chanting "Di-na-mo! Di-na-mo!"

His team loses the match in a gripping, end-to-end 3-2 encounter. As the final whistle blows and the Western Knights fans celebrate, he taps his beer can on the railing impatiently, barks one final time at the players, before stalking away to watch a different match.

"It's not really about who wins, but no one wants to lose!" says Skoko. "Look, there's a good rivalry between the clubs. I mean, I can only talk for North Geelong versus the Knights and Dandy [Dandenong City], but there's a very healthy rivalry."

Truth be told, this is a festival of football rooted in ethnic identity. The stadium and reserve field smell of Dencorub, cigarette smoke and cevapi, the latter served by canteen ladies in aprons emblazoned with the Croatian flag. Conversations oscillate between Croatian and English at high speed. High-heeled young women roam in packs, dressed impeccably with a red, white and blue sash reading "Miss Hurstville Zagreb" or "Miss Brisbane Croatia". Children play in Croatian national team jerseys and caps. At the start of the stadium tunnel, a large black banner with a Melbourne Knights badge reads "Welcome to Croatia".

In a society that asks that citizenship, not symbolism, be the test of loyalty, this is the coalface of multicultural Australia. Depending on who you ask, this is a multicultural festival, a football tournament, or just a great excuse for a piss-up among friends and family. The federal government, through the Department of Immigration and Citizenship, tipped some money into supporting the tournament, and yet there is little interest from the wider football community.

Such is the culture of Australian soccer. It has become fashionable in football circles to pejoratively label these clubs 'monocultural', and engage in routine bouts of hand wringing about the strident nationalism that comes with them. "I think it's a real shame", says Skoko. "I think the FFA and FFV have had a lot to do with that, they're trying to get rid of the ethnicity in the game, which is totally wrong. People will argue – 'trouble this, trouble that' – but that's part of the game, that's part of the fans."

It is striking that oldest football tournament in the country finishes just five days before the start of the A-League, which is the newest. When the marketing gurus came up with the dichotomy of "old soccer, new football" in 2004, many of these people and their clubs were left on the wrong side of history. If the A-League is the vanguard of "new football", then this tournament is proudly "old soccer."

On Friday night, as day two of the tournament wound down, 4,750 spectators piled into Knights Stadium for the 88th Melbourne derby, between Melbourne Knights and South Melbourne in the Victorian Premier League. South Melbourne are a Greek-backed side from the other side of the city, and opposite the Mark Viduka Stand fans on the terraces chanted either 'Cro-a-zia' or 'Hellas' in front of a hand-made sign that read 'Against Modern Football.' In a tense match, the Knights were left to rue several wasted opportunities as a second-half goal for South Melbourne put them through to the semi-final.

Since the 1950s, 'Croatia' – whether in Melbourne, Sydney, Whyalla, Perth, Wollongong or Glenorchy – has been one of the few places that Australians can express pride in their heritage. For gear steward Mirko 'Rus' Rastocic, who fled Yugoslavia in 1971, this is no small privilege. Despite his club's forced name change, to Rus Melbourne Knights will always be 'Croatia'.

"Soccer nice game, but in this country too complicated. Too many politics. It's very hard, when they change name. They said to me, you must change, but I never take it off. Always Croatia to me … this country should be more open. Multicultural? It's bullshit, it's bullshit. Not in the soccer."

The Croatian community has been a cradle of Australian football, with clubs big and small having nurtured generations of Australian talent. Adelaide Raiders were once home to indigenous activist Charlie Perkins in the late 1950s, while Werrington Croatia from the foot of the Blue Mountains proudly list the current Crystal Palace vice-captain Mile Jedinak as its most famous product. Having witnessed many young players come through Melbourne Knights, Rus names Mark Viduka as the best character in the dressing room, but maintains Josip Simunic was the best player he ever saw.

On Sunday, the tournament finals are staged for the women's, men's and senior teams. Rus watches on proudly as his grandson, Damien Rastocic, scores the winner for Melbourne Knights to take out the championship in extra-time. It is a fitting end to the tournament.

Rus is somewhat of an unlikely club legend. Players who move to Europe send him postcards and playing strips from their travels, and his devotion to the club has seen him become part of the furniture at Knights Stadium.

"There's been about half-dozen presidents, treasurers, secretaries in the club, everyone change, go and come back but I'm still here" smiles Rus. "Sometimes, I know [I have] nothing to do, but I find myself in the car to come here. It's like second home. I tried three, four times to give up this, but for some reason I always stay."